Military Short Sale FAQs For Va Beach/Hampton Roads Sellers (An Introduction):
Military short sale faqs for Va Beach/Hampton Roads Sellers provides a good starting point for our active duty veterans to consider. Keep in mind the importance of using a total team (Attorney/REALTOR(R)) who work together for a positive outcome.
FAQ – What is a short sale (defined):
ANSWER – A military short sale for Va Beach/Hampton Roads Sellers is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens (such as a mortgage) against the property, and the property owner cannot afford to repay the liens’ full amounts.
Whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt and an unpaid balance owed to the creditors is known as a deficiency. (read more about deficiency below).
FAQ – Do I qualify for a military short sale? (Hardship)
ANSWER – Banks, lenders, credit unions may vary in their requirements. First, you should consult with a Real Estate Attorney experienced your or other lenders. The consult should be free. (View our Attorney’s contact information here).
If you are PCS’ing (Permanent Change of Station) then your hardship is already defined.
Other hardships include divorce, job loss, an escalation of the monthly amount due under your mortgage payment, medical expenses or potentially travel time to work where your command requires you be closer and on-call.
FAQ – Do I have to be delinquent to do a military short sale?
ANSWER – some lenders do require that you be 1 payment behind. Being 35 days late one time may meet this requirement and you should be able to stay current after that. IMPORTANT NOTE: Missing Mortgage payments is not a requirement of a VA Compromise Sale (this minimizes/negates credit damage).
FAQ – What Is the Time-line to complete a military short sale? (Patience required)
ANSWER – Our experience with military short sales is that you can expect 60 days to six months for the process to complete (average). Some can be faster, some can be longer if issues arise. (Read the military short sale timeline here):
Contact your REALTOR® with any questions. Do the free consult with the Real Estate Attorney’s Office ASAP. Once you are comfortable with the “legal” side of the process then contact your REALTOR® to list and prepare the home for sale.
Provide the Attorney’s office any documents requested ASAP.
REALTOR® puts the home on Multiple Listing Service, recommends items to help the home show better, markets via blog, social media, and more, sets up appointments, follows through for feedback on showings.
When a contract obtained on your home, REALTOR® negotiates with the buyer’s agent and presents options to the seller (you). REALTOR® recommends any counter-offer options, inspection/repair items requested, and more.
Once the contract ratified (all parties agree to terms) it is submitted to the attorney’s office for submission to your lender(s). Attorney’s office will most likely request more updated documents from the seller and agent(s). The attorney’s office will spend countless hours emailing and phone calls to represent your interests and expedite approval(s). The lender normally takes 45-90 days to complete their decision.
Bank/Lender receives a contract from the attorney’s office and starts the process which can be ordering a Broker Price Opinion (BPO) or just ordering an appraisal of the seller’s property.
The lender schedules appraisal to determine “market value” using comparable properties nearby. Your REALTOR® attends appraisal to provide any input needed.
The lender reviews the appraisal and notifies the attorney on an acceptable price for the property. If the offer price in-line with an offer, then all is good. If the bank/lender requires a higher offer price then your REALTOR® must go back to the buyer’s agent and present counter-offer.
Once price and terms accepted by the prospective buyer then the property is scheduled for closing. Closing is normally 45-60 days after the lender issues approval letter.
During the period after bank/lender approval and prior to closing there may be some inspections to be completed such as home and termite/moisture.
FAQ – Starting the Military Short Sale process – What is important?
ANSWER – Many items should be considered but:
Consult with our real estate attorney where you obtain legal counsel and tax advice. Complete paperwork requested by the Attorney’s office.
Who pays the REALTORS® commissions, closing costs, and other fees? The bank/lender covers these costs but may not pay for any unpaid POA/HOA fees.
Upfront fees? Your REALTOR® does not charge an upfront fee and will list and market your home after your consultation and engagement with the Attorney. Note: We do not accept short sale listings without the engagement of the attorney. There is too much work required to get this “legal” process completed promptly and correctly. Your attorney has the expertise and contacts to represent you best.
FAQ – What happens to my credit?
ANSWER – We are hard-pressed to answer this question as it varies from person to person and situations. In general, if you are current on your mortgage and other debts your credit “hit” will be minimal. However, a short sale is much better than foreclosure when it comes to credit and generally, you can purchase a home within 2 years. (VA requirements may be faster).
FAQ – Is a short sale better than a foreclosure for the bank/lender?
ANSWER – See why below:
Yes as it usually more cost prudent for the bank/lender to approve a short sale rather than foreclose and own the property, absorb legal costs, re-market the real estate, and go through all the other “pains” of owning a home they did not want.
Should you stop making mortgage payments? No, as this will definitely cause major harm to your credit score. (Refer to above about some lenders requiring one payment to be missed).
FAQ – When is the best time to start the military short sale process?
ANSWER – Our experience is that it will take 5-7 months in most cases, maybe longer in some instances. The sooner the better so you do not get stuck with a mortgage payment after moving.
FAQ – Am I guaranteed my military short sale will be approved?
ANSWER – We make every effort to ensure a successful conclusion and short sale. However, we cannot guarantee positive results. Keep in mind that the military short sale process involves the mortgage servicer, the investor(s), and the mortgage insurance/guarantor. This is where the attorney’s office uses their expertise to weave through the multitude of dotting the “I’s” and crossing the “t’s”.
FAQ – What is a waiver of deficiency?
Answer: Lien releases are not a waiver of deficiency. A home-equity (HELOC) or any type of second mortgage, will require documentation/letters ensuring the deficiency is waived. Make sure you understand that if your approval letter only releases the lien, and does not include the deficiency, then your deficiency has not been waived. This is why we use an Attorney for all our short sales. The process is a complicated legal matter and you need to be protected. Once again, talk with our Attorney’s office.
Deficiencies are definitely not ever waived in foreclosures. They may not always be pursued but they don’t go away easily and if they do, you can count on your lender reporting it to the IRS as income to you
FAQ – My family wants to buy my house being short sold – can they?
ANSWER: Typically No. Banks/lenders normally require all parties to sign an Affidavit of Arms Length Transaction. Banks/lenders are not favorable towards sales to relatives, businesses where parties have an interest, etc
FAQ – What are the most frequent pitfalls when doing a military short sale?
ANSWER – Best answer: Putting off or delaying the start of the process, not engaging the attorney’s free consult so you know the facts and impact, and not being pro-active with paperwork when requested as the Attorney’s office must meet certain bank/lender time-lines.
Military Short Sale FAQs For Va Beach/Hampton Roads Sellers (summary)
Make sure you understand the Military short sale faqs for Va Beach/Hampton Roads Sellers before proceeding. Are you thinking of selling your home via a military short sale? Contact me here as I specialize and will work hard to bring your case to a successful resolution.